Increase in customs duties on Chinese electric cars, MG most severely affected

The European Commission has decided to increase customs duties on electric vehicles imported from China, with rates reaching up to 38.1%. This decision aims to counter subsidies deemed unfair from which Chinese manufacturers benefit.

For several months, the European Commission has been carrying out an investigation to determine whether China was excessively subsidizing its national manufacturers, thus allowing very competitive prices on the European market. This situation having been deemed responsible for unfair competition, to the detriment of European producers of electric cars, the European Commission has decided to impose up to 28 points of increase in customs duties for cars manufactured in China.

Variable customs duties

The new customs duty rates will be applied differently according to each Chinese manufacturer, depending on the levels of public subsidies received:

• SAIC (MG, IM Motors): 38.1%
• Geely (Zeekr, Volvo, Lotus, Polestar): 20%
• BYD: 17.4%
• Other manufacturers who participated in the survey: 21%
• Manufacturers who did not cooperate: 38.1%

For Tesla, the European Commission has indicated that an individualized rate will be calculated and announced later. According to The Guardiancustoms duties could reach up to 25% for “ four largest Chinese manufacturers ”, although the exact details remain to be clarified.

Margaritis Schinas, Vice-President of the European Commission, declared on Wednesday June 12 that the value chain of Chinese electric cars “ benefits from unfair subsidies that threaten to cause economic harm to European battery electric vehicle producers. When our partners break the rules, we assert our rights “, he said in the press release before adding: “ Today we have reached an important milestone in our anti-subsidy investigation, based on clear evidence from our thorough investigation and in full compliance with World Trade Organization rules. »

Chinese reaction

In response to this decision, China threatened to surcharge European vehicles equipped with engines of more than 2.5 liters of displacement. The latter, luxurious, are those on which European manufacturers make the most margin. Mercedes or BMW, for example, generate up to 25% of their turnover in China.

China’s Foreign Ministry said the Chinese government would take all necessary measures to ” firmly defend » its rights and legitimate interests.

Consumers affected?

Before the final application of these customs duty increases, scheduled for November 2024, discussions will begin between the European and Chinese authorities to try to find a solution acceptable to both parties. If these negotiations fail, provisional countervailing duties will be introduced from July 4.

For European consumers, it is unlikely that these customs duties will be passed on directly and in full to the final price of vehicles, with Chinese manufacturers having the capacity to absorb part of these costs thanks to their high profit margins. As a reminder, MG had announced promotions up to the ecological bonus as soon as it was excluded from it at the start of the year.

This increase in customs duties could also encourage Chinese manufacturers to intensify their presence in Europe. Projects to produce cars and batteries are already underway, such as the BYD factory in Hungary. In addition, some brands like Volvo and Mini have already announced their intention to repatriate the production of their electric cars to Europe. Volvo (Geely) is also about to transfer part of its production intended for Europe to Belgium.

Source : European Commission